Anil Kumar Srivastava vs State Of U.P. & Another on 20 August, 2004
Author: Kapadia
Bench: Ashok Bhan, S.H. Kapadia
CASE NO.:
Appeal (civil) 5402 of 2004
PETITIONER:
Anil Kumar Srivastava
RESPONDENT:
State of U.P. & Another
DATE OF JUDGMENT: 20/08/2004
BENCH:
ASHOK BHAN & S.H. KAPADIA
JUDGMENT:
J U D G M E N T [Arising out of SLP (C) No.7790 OF 2004] WITH TRANSFERRED CASE No.54 OF 2004.
On the above submissions, the central point which arises for determination is : whether the tender price of Rs.31,850/- per sq. mtr. is understated. In the present case, respondent no.2 invited offers for the plot admeasuring 54,320.18 sq. mtrs. for the shopping mall with 2800 ECS in order to decongest sector 18. Wide publicity was given. Several reputed developers bought tender documents. However, at the end of the day, there was only one bidder (respondent no.3) in the field. In the present case, malafides have been alleged, but not pressed. Therefore, the question before us is : whether respondent no.2's decision in accepting the bid of respondent no.3 was arbitrary, unreasonable and in violation of the Board Resolution dated 10.7.2003.
Before coming to the above challenge, we would like to examine the concepts of 'valuation' and 'upset/reserve price'. In the case of McManus v. Fortescue & another reported in [1907 Vol.II K.B. page 1] it has been held by Court of Appeal that in a sale by auction, subject to reserve, every offer/bid and its acceptance is conditional. That the public is informed by the fact, that the sale is subject to a reserve, that the auctioneer has agreed to sell for the amount which the bidder is prepared to give only in case that amount is equal to or higher than the reserve. That the reserve puts a limit on the authority of the auctioneer. He cannot accept a price below the upset/reserve price. That he could refuse the bid which is below the upset price.
The aforestated ruling explains the meaning of the term 'reserve price'. It indicates the object behind fixing the reserve price viz. to limit the authority of the auctioneer. In the present case, the board resolution is meant to guide the officers of the second respondent. The resolution prescribes the guidelines for fixing the reserve price. The concept of reserve price is not synonymous with 'valuation of the property'. These two terms operate in different spheres. An invitation to tender is not an offer. It is an attempt to ascertain whether an offer can be obtained with a margin. [See: Pollock & Mulla on Indian Contract & Specific Relief Acts (2001) 12th Edition. Page 50].
Valuation is a question of fact. This Court is reluctant to interfere where valuation is based on relevant material. [See: Duncans Industries Ltd. v. State of U.P. & others reported in (2000) 1 SCC 633]. The difference between valuation and upset price has been explained in the case of B. Susila & another v. Saraswathi Ammal & others reported in [AIR 1970 Madras 357] in which it has been held that fixation of an upset price may be an indication of the probable price which the land may fetch from the point of view of intending bidders. However, notwithstanding the fixation of upset price and notwithstanding the fact that a bidder has offered an amount higher than the reserve/upset price, the sale is still open to challenge on the ground that the property has not fetched the proper price and that the sale be set aside. That the fixation of the reserve price does not affect the rights of the parties. Similarly, in the case Dr. A. U. Natarajan & another v. Indian Bank, Madras reported in [AIR 1981 Madras 151] it has been held that the expressions "value of a property" and "upset price" are not synonymous but have different meanings. That the term "upset price" means lowest selling price or reserve price. That unfortunately in many cases the word "value" has been used with reference to upset price. That the sale has to commence at the higher price and in the absence of bidders, the price will have to be progressively brought down till it reaches the upset price. That the upset price is fixed to facilitate the conduct of the sale. That fixation of upset price does not preclude the claimant from adducing proof that the land is sold for a low price.
Author: Kapadia
Bench: Ashok Bhan, S.H. Kapadia
CASE NO.:
Appeal (civil) 5402 of 2004
PETITIONER:
Anil Kumar Srivastava
RESPONDENT:
State of U.P. & Another
DATE OF JUDGMENT: 20/08/2004
BENCH:
ASHOK BHAN & S.H. KAPADIA
JUDGMENT:
J U D G M E N T [Arising out of SLP (C) No.7790 OF 2004] WITH TRANSFERRED CASE No.54 OF 2004.
On the above submissions, the central point which arises for determination is : whether the tender price of Rs.31,850/- per sq. mtr. is understated. In the present case, respondent no.2 invited offers for the plot admeasuring 54,320.18 sq. mtrs. for the shopping mall with 2800 ECS in order to decongest sector 18. Wide publicity was given. Several reputed developers bought tender documents. However, at the end of the day, there was only one bidder (respondent no.3) in the field. In the present case, malafides have been alleged, but not pressed. Therefore, the question before us is : whether respondent no.2's decision in accepting the bid of respondent no.3 was arbitrary, unreasonable and in violation of the Board Resolution dated 10.7.2003.
Before coming to the above challenge, we would like to examine the concepts of 'valuation' and 'upset/reserve price'. In the case of McManus v. Fortescue & another reported in [1907 Vol.II K.B. page 1] it has been held by Court of Appeal that in a sale by auction, subject to reserve, every offer/bid and its acceptance is conditional. That the public is informed by the fact, that the sale is subject to a reserve, that the auctioneer has agreed to sell for the amount which the bidder is prepared to give only in case that amount is equal to or higher than the reserve. That the reserve puts a limit on the authority of the auctioneer. He cannot accept a price below the upset/reserve price. That he could refuse the bid which is below the upset price.
The aforestated ruling explains the meaning of the term 'reserve price'. It indicates the object behind fixing the reserve price viz. to limit the authority of the auctioneer. In the present case, the board resolution is meant to guide the officers of the second respondent. The resolution prescribes the guidelines for fixing the reserve price. The concept of reserve price is not synonymous with 'valuation of the property'. These two terms operate in different spheres. An invitation to tender is not an offer. It is an attempt to ascertain whether an offer can be obtained with a margin. [See: Pollock & Mulla on Indian Contract & Specific Relief Acts (2001) 12th Edition. Page 50].
Valuation is a question of fact. This Court is reluctant to interfere where valuation is based on relevant material. [See: Duncans Industries Ltd. v. State of U.P. & others reported in (2000) 1 SCC 633]. The difference between valuation and upset price has been explained in the case of B. Susila & another v. Saraswathi Ammal & others reported in [AIR 1970 Madras 357] in which it has been held that fixation of an upset price may be an indication of the probable price which the land may fetch from the point of view of intending bidders. However, notwithstanding the fixation of upset price and notwithstanding the fact that a bidder has offered an amount higher than the reserve/upset price, the sale is still open to challenge on the ground that the property has not fetched the proper price and that the sale be set aside. That the fixation of the reserve price does not affect the rights of the parties. Similarly, in the case Dr. A. U. Natarajan & another v. Indian Bank, Madras reported in [AIR 1981 Madras 151] it has been held that the expressions "value of a property" and "upset price" are not synonymous but have different meanings. That the term "upset price" means lowest selling price or reserve price. That unfortunately in many cases the word "value" has been used with reference to upset price. That the sale has to commence at the higher price and in the absence of bidders, the price will have to be progressively brought down till it reaches the upset price. That the upset price is fixed to facilitate the conduct of the sale. That fixation of upset price does not preclude the claimant from adducing proof that the land is sold for a low price.
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